The global office market recovery has cooled somewhat over the past year amid slowing economic growth in China, recession in Europe and a tepid economic recovery in North America. A marked slowdown in leasing activity from the banking and finance sector also weighed on global office markets. Nonetheless, prime office occupancy costs increased in 74 of the 133 global markets tracked for this report. Occupancy costs declined in 37 office markets and held steady in 22.
Global office occupancy costs have increased 2.1% over the past year, led by the Americas, with a 5.2% annual increase, and Asia Pacific, with a 2.6% annual increase. Growth in demand from technology companies drove double-digit increases in prime occupancy costs in San Francisco and Seattle.
Asia Pacific markets had the highest office occupancy costs, with the region accounting for six of the top 10 most expensive markets in Q3 2012. Despite year-over-year occupancy cost declines, Hong Kong (Central) remained the world’s most expensive office market.
Tight market conditions, strong demand for high-quality space and constrained levels of new supply are the major factors driving big increases in occupancy costs in prime office markets across the globe.
Source : CBRE